Jamie Spencer
Trade Gains Driven by Preemptive Shipping Ahead of Trump Policies
China’s exports accelerated in December, with imports also showing signs of recovery, as factories rushed inventory overseas in anticipation of heightened trade tensions under U.S. President-elect Donald Trump.
Exports have been a critical pillar for China’s $18 trillion economy, which continues to grapple with:
- A prolonged property crisis.
- Weak consumer confidence.
- Deflationary pressures.
However, the outlook for 2025 remains clouded, as Trump is expected to impose new tariffs on Chinese goods, rekindling fears of a renewed U.S.-China trade war.
Xu Tianchen, senior economist at the Economist Intelligence Unit, noted:
“Trade front-loading became more visible in December due to both Chinese New Year effects and Donald Trump’s inauguration.”
China’s Trade Performance in December
According to Chinese customs data, the country posted stronger-than-expected trade figures:
- Exports: +10.7% year-on-year, surpassing the 7.3% growth forecast.
- Imports: +1.0%, the best performance since July 2024, surprising analysts who expected a 1.5% decline.
- Trade surplus: Expanded to $104.8 billion from $97.4 billion in November.
- U.S.-China trade surplus: Increased to $33.5 billion, up from $29.81 billion in November.
Despite these gains, uncertainty remains over the impact of Trump’s proposed tariffs and the European Union’s potential tariffs on Chinese electric vehicles, which could slow China’s auto exports.
Weak Yuan Supports Export Growth
A weaker yuan helped Chinese manufacturers find overseas buyers, despite soft domestic demand. However, price competition remains a key strategy for exporters, as manufacturers have been cutting prices aggressively to maintain market share.
For full-year 2024, China’s trade data showed:
- Exports grew by 5.9% annually.
- Imports rose by just 1.1%.
Barclays analysts commented:
“The double-digit rise in December exports (led by shipments to the U.S. and ASEAN) suggests that the threat of tariffs is already shifting export patterns.”
Muted Market Reaction
Despite positive trade data, markets showed little enthusiasm:
- The yuan remained near 16-month lows.
- China’s stock indexes (.SSEC, .CSI300) fell, reflecting investor concerns about 2025 trade tensions.
Signs of Economic Stabilization Amid Stimulus Efforts
Some signs of resilience emerged following China’s recent stimulus push:
- Factory activity expanded for the third consecutive month.
- Services and construction sectors rebounded in December.
- South Korea’s exports to China rose 8.6%, signaling demand for technology products.
Meanwhile, China’s iron ore imports hit a record high for the second straight year, reflecting:
- Lower global prices driving purchasing activity.
- Continued demand for raw materials, despite the lingering property crisis weighing on steel consumption.
However, crude oil imports fell for the first time in two decades (excluding pandemic-related declines), indicating:
- Tepid economic growth.
- Declining fuel consumption.
Policy Outlook: Easing Monetary and Fiscal Measures in 2025
China’s top policymakers have pledged to loosen monetary policy and adopt a more proactive fiscal stance in 2025 to:
- Offset external risks from potential trade wars.
- Revitalize domestic demand.
- Ensure economic growth meets the 5% target.
Can China sustain its export-driven momentum amid U.S. and EU trade risks? The coming months will be critical in determining whether China’s economy can withstand external shocks while maintaining its growth trajectory.
